GBP/USD is experiencing a decline in momentum, settling near 1.3400 during the early session on Thursday in Asia. The US military has conducted new strikes in Iran, while Trump has stated that he will not hastily pursue a deal with Tehran. Traders are scaling back their expectations for Bank of England rate hikes as worries over political developments ease and UK data shows signs of softness. The GBP/USD pair sees some selling pressure around 1.3400 during the Asian trading hours on Thursday. The British Pound is experiencing a decline against the US Dollar due to recent geopolitical developments.
Markets are exhibiting caution as they await the release of the US April Personal Consumption Expenditures Price Index inflation report, scheduled for later today. The US military executed additional strikes in Iran, focusing on a location that presented a risk to US forces and commercial shipping, as reported. The US characterised the actions as calculated, solely defensive, and aimed at preserving the ceasefire. On Wednesday, President Donald Trump expressed his commitment to securing a favourable agreement to conclude the conflict with Iran, cautioning that the regime’s attempts to exhaust him through delays will be ineffective because “I don’t care about the midterm elections.”
Increasing tensions and indications of a sustained conflict in the Middle East may strengthen a safe-haven currency like the Greenback, potentially posing challenges for the major pair in the short term. Markets have reduced their expectations for a rate hike from the Bank of England in light of softer inflation data, an unexpected increase in the Unemployment Rate to 5.0% for April, and a decrease in political concerns.
“Traders now price one rate hike fewer in 2026 than at the end of the previous week, and gilt yields saw the biggest weekly drop since late-2023,” Pantheon Macroeconomics said in a note on Tuesday. “We estimate that lower yields were driven by lower oil prices, a fall in betting-market odds on Sir Keir Starmer being replaced, and Andy Burnham committing to maintain current fiscal rules,” they added.